How Do You Value a Ping-Pong Table?

Benefits, Perks, and Rethinking What They're Worth

Posted on October 12, 2018

It seems like every week brings us a new type of benefit, from ping pong tables to pet insurance. While these perks look great on the website, where do they fit in the context of the bottom line, and what do they really mean to workers? As the labor market gets tighter, benefits are often seen as differentiators in attracting and retaining talent. But when it comes to measuring value, things can get tricky.

The value of benefits is typically measured in one of two ways:

Monetary Value

Reported Importance

The monetary value calculation is relatively simple. If, as an individual, it costs me $500/month to buy health insurance, and my company is willing to pay 50% of that cost, the value to me is a very obvious $250/month. The organization, in turn, is incurring a simple cost. This math gets slightly more complex when we include costs to the company such as compliance reporting or administrative overhead, but the basic costs are pretty clear.

There’s no doubt that employees (and prospective employees) love to see a long list of generous benefits on the ‘careers’ page. But any CFO will tell you that the costs of all of these programs add up quickly. Every organization has to do their own assessment to decide how to place a value on benefits.

For startups during the tech bubble, perks like ping pong tables and free food might seem frivolous, but they were designed specifically to attract and retain a target demographic. In other industries, flexible schedules and work from home policies were the keys to attracting the right talent. Yet for many frontline workers in industries like healthcare, manufacturing and food service, those perks would be impossible, as workers need to be physically present to do their jobs.

Benefit value comes from an alignment between the needs of the target workforce, the cost structure of the organization, regulatory requirements and many other factors. CFOs still think about ROI, but they are increasingly considering the value of benefits in other ways.

Metrics for benefits have gone beyond the concept of direct ROI, and are now including other indicators such as engagement, productivity and referral rates. Wellness programs and financial management solutions have evolved to consider the needs of employees outside of the workplace, and employers are increasingly recognizing the impact of perks that promote the stability of their employees, including issues such as transportation, childcare, financial wellness and more.

The challenge for CFOs has shifted from aligning benefits with the direct costs, to aligning benefits with the strategic goals and values of the organization. While this is a more complex proposition, it ultimately results in a better value proposition for both employers and their workforce.